House Speaker John Boehner’s new budget proposal would essentially require, as the price of raising the debt ceiling again early next year, a choice between deep cuts in the years immediately ahead in Social Security and Medicare benefits for current retirees, repeal of health reform’s coverage expansions, or wholesale evisceration of basic assistance programs for vulnerable Americans.

The plan is, thus, tantamount to a form of “class warfare.” If enacted, it could well produce the greatest increase in poverty and hardship produced by any law in modern U.S. history.
This may sound hyperbolic, but it is not. Both the mathematics and the politics are clear.
The Boehner plan calls for large cuts in discretionary programs of $1.2 trillion over the next ten years, and it then requires additional cuts that are large enough to produce another $1.8 trillion in savings to be enacted by the end of the year as a condition for raising the debt ceiling again at that time.

The Boehner plan envisions no tax increases, with its entire $1.8 trillion in additional deficit reduction coming from budget cuts. Speaker Boehner gave documents to House Republican caucus members stating that the $1.8 trillion would come from “entitlement reforms and savings” and that the plan “includes no tax hikes.” In addition, Speaker Boehner told radio talk show host Rush Limbaugh that Republicans appointed to the special committee that will craft the $1.8 trillion in savings won’t support tax increases and, in the unlikely event that that committee proposed a plan with tax increases, House Republicans would vote it down anyway.[1] A House GOP aide toldNational Review more bluntly: “We appoint members to the committee, and we’re not appointing any Republicans who will vote for tax hikes.” [2]

The first round of cuts under the Boehner plan would hit discretionary programs hard through austere discretionary caps that Congress will struggle to meet; discretionary cuts thus will largely or entirely be off the table when it comes to achieving the further $1.8 trillion in budget reductions. As Speaker Boehner’s documents make clear, virtually all of the $1.8 trillion would need to come from cuts in entitlement programs. (Cuts in entitlement spending totaling more than $1.5 trillion would produce sufficient interest savings to achieve $1.8 trillion in total savings.)

To secure $1.5 trillion in entitlement savings over the next ten years would require draconian policy changes. Policymakers would essentially have three choices: 1) cut Social Security and Medicare benefits heavily for current retirees, something that all budget plans from both parties (including House Budget Committee Chairman Paul Ryan’s plan) have ruled out; 2) repeal the Affordable Care Act’s coverage expansions while retaining its measures that cut Medicare payments and raise tax revenues, even though Republicans seek to repeal many of those measures as well; or 3) eviscerate the safety net for low-income children, parents, senior citizens, and people with disabilities. There is no other plausible way to get $1.5 trillion in entitlement cuts in the next ten years.

The evidence for this conclusion is abundant:
The “Gang of Six” plan, with its very tough and controversial entitlement cuts, contains total entitlement reductions of $640 to $760 billion over the next ten years not counting Social Security, and $755 billion to $875 billion including Social Security. (That’s before netting out $300 billion in entitlement costs that the plan includes for a permanent fix to the scheduled cuts in Medicare physician payments that Congress regularly cancels; with these costs netted out, the Gang of Six entitlement savings come to $455 to $575 billion.)

The budget deal between President Obama and Speaker Boehner that fell apart last Friday, which included cuts in Social Security cost-of-living adjustments and Medicare benefits as well as an increase in the Medicare eligibility age, contained total entitlement cuts of $650 billion (under the last Obama offer) to $700 billion (under the last Boehner offer).

The Ryan budget that the House passed in April contained no savings in Social Security over the next ten years and $279 billion in Medicare cuts.

To be sure, the House-passed Ryan budget included much larger overall entitlement cuts over the next 10 years. But that was largely because it eviscerated the safety net and repealed health reform’s coverage expansions. The Ryan plan included cuts in Medicaid and health reform of a remarkable $2.2 trillion, from severely slashing Medicaid and killing health reform’s coverage expansions. The Ryan plan also included stunning cuts of $127 billion in the SNAP program (formerly known as food stamps) and $126 billion in Pell Grants and other student financial assistance.

That House Republicans would likely seek to reach the Boehner budget’s $1.8 trillion target in substantial part by cutting programs for the poorest and most vulnerable Americans is given strong credence by the “Cut, Cap, and Balance” bill that the House recently approved. That bill would establish global spending caps and enforce them with across-the-board budget cuts —exempting Medicare and Social Security from the across-the-board cuts while subjecting programs for the poor to the across-the-board axe. This would turn a quarter century of bipartisan budget legislation on its head; starting with the 1985 Gramm-Rudman-Hollings law, all federal laws of the last 26 years that have set budget targets enforced by across-the-board cuts have exempted the core assistance programs for the poor from those cuts while including Medicare among programs subject to the cuts. This component of the “Cut, Cap, and Balance” bill strongly suggests that, especially in the face of an approaching election, House Republicans looking for entitlement cuts would heavily target means-tested programs for people of lesser means (and less political power).

In short, the Boehner plan would essentially force policymakers to choose among cutting the incomes and health benefits of ordinary retirees, repealing the guts of health reform and leaving an estimated 34 million more Americans uninsured, and savaging the safety net for the poor — or letting the nation default early next year. The plan would do so even as tax breaks, including the many lucrative tax breaks that go to the wealthiest and most powerful individuals and corporations, are protected by Boehner’s pledge that, in the highly unlikely event that the special committee proposes tax increases, House Republicans would vote down its budget package.
President Obama has said that, while we must reduce looming deficits, we must take a balanced approach. The Boehner proposal fails this test of basic decency. The President should veto the bill if it reaches his desk. Congress should find a better way to avoid a default.

End Notes:
[1] “Speaker Boehner Calls America’s Anchorman to Explain His Proposal,” available at http://www.rushlimbaugh.com/home/daily/site_072611/content/01125106.guest.html.
[2] See Andrew Stiles, “A New Deficit Plan,” National Review Online, July 26, 2011.
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The Center on Budget and Policy Priorities is a nonprofit, nonpartisan research organization and policy institute that conducts research and analysis on a range of government policies and programs. It is supported primarily by foundation grants.

6 comments:

Anonymous
said...

I am not surprised, but this is a very disengenuious report about the Boehner plan. The CBO scored the plan and they indicate the plan would reduce the 2012 budget by about $1 Billion which is what the US borrows every 5 hours and 20 minutes.

We all know that all these plans including the phantom Obama plan are political Kabuki. The most basic principle of representative government is that a congress or parliament cannot bind its successor. So by 2021 when this 1.8 trillion cut is projected to be fully implemented it will most likely not materialize given the make up of a congress in 2021 and before.

You can raise all the taxes you want, pull us out of all the wars (which exited wars are already factored in future projections), cut military to the bone & spend billions on green energy programs and you still won't solve the problem which is Social Security and Medicare.

Without any substantial changes for FUTURE recipients of these two programs instead of using the 1940s and 1960's models when they were created, we are heading toward insolvency.

Regardless, in the end of this current debate, our credit rating will get downgraded because of this fact and our inability to honestly deal with it. Ratings agencies know any future cuts enacted today are not binding.

So it is fun to play class warfare and scare Aunt Virginia of losing her current benefits so as to gain some political points, but we are approaching the end of the road. Unfortunately, most still have their head in the sand about this unmovable fact.

Fact: Allow all Bush tax cuts to expire, close tax give-aways to the corporate well-heeled, and end these idiotic wars; and these debt problems basically disappears. Bush's tax cuts alone cost us in the realm of $3.5 trillion (dwarfing the plans discussed right now).

But nooooooo. Let's balance the budget with a particualr whack against the poor and middle class. So speaks the Tea Party...otherwise we'll blow the country up with a debt default. What's happending is a hostage taking, not good-faith negotiation.

Not since Abe Lincoln took office has a president's political opposition been so ruthlessly determined to oppose -- even to the point of national disloyalty, which is precisely what the GOP's treacherous machinations over the debt limit represent. It is futile to look back on Obama's first two years and speculate that he should have done this, or that he should have done that, and then this or that might have proceeded better; it is futile because whatever path Obama might have chosen, his opposition was acrobatically hellbent on obstructing it.

"House Speaker John Boehner’s new budget proposal would essentially require, as the price of raising the debt ceiling again early next year, a choice between deep cuts in the years immediately ahead in Social Security and Medicare benefits for current retirees, repeal of health reform’s coverage expansions, or wholesale evisceration of entitlement programs for a large number of moochers."

Doesn't go far enough. Not enough tax cuts and de-regulation....But it is a start

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